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3. American Export Import Shipping Company operates a general cargo carrier service between New York and several Western European ports. It hauls two major categories of freight: manufactured items and semimanufactured raw materials. The demand functions for these two classes of goods are;P1=100-2Q1;P2=80-Q2;where Q1= tons of freight moved. The total cost function for American is;TC=20+4(Q1+Q2);f. Explain the difference in profit levels between the differential pricing and uniform pricing cases. Hint: First calculate the point price elasticity of demand under the uniform price output solution.

Paper#29717 | Written in 18-Jul-2015

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